Cracker Barrel 2014 Annual Report Download - page 30

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e notional amount for the interest rate swap entered
into on June 18, 2014 increases by $40,000 each May over the
four-year term of the interest rate swap beginning in May
2016 until the notional amount reaches $160,000 in May 2018.
e notional amounts for the interest rate swaps entered
into on June 24, 2014 and July 1, 2014 increase by $30,000
each May over the four-year terms of the interest rate swaps
beginning in May 2016 until the notional amounts each reach
$120,000 in May 2018.
At both August 1, 2014 and August 2, 2013, our outstand-
ing borrowings were swapped at a weighted average interest
rate of 3.73%, which is the weighted average xed rate of our
interest rate swaps plus our current credit spread. See
Note 6 to our Consolidated Financial Statements for further
discussion of our interest rate swaps.
Commodity Price Risk. Many of the food products that
we purchase are aected by commodity pricing and are,
therefore, subject to price volatility caused by market conditions,
weather, production problems, delivery diculties and
other factors which are outside our control and which are
generally unpredictable.
e following table highlights the ve food categories
which accounted for the largest shares of our food purchases
in 2014 and 2013:
Percentage of Food Purchases
2014 2013
Beef 13% 13%
Dairy (including eggs) 12% 12%
Fruits and vegetables 12% 12%
Poultry 11% 11%
Pork 11% 11%
Other categories aected by the commodities markets, such
as grains and seafood, may each account for as much as 7%
of our food purchases. While some of our food items are
produced to our proprietary specications, our food items are
based on generally available products, and if any existing
suppliers fail, or are unable to deliver in quantities required by
us, we believe that there are sucient other quality suppliers
in the marketplace that our sources of supply can be replaced
as necessary to allow us to avoid any material adverse eects
that could be caused by such unavailability. We also recognize,
however, that commodity pricing is extremely volatile
and can change unpredictably even over short periods of time.
Changes in commodity prices would aect us and our competi-
tors generally, and depending on the terms and duration of
supply contracts, sometimes simultaneously. We enter into
contracts for certain of our products in an eort to minimize
volatility of supply and pricing. In many cases, or over the
longer term, we believe we will be able to pass through some
or much of the increased commodity costs by adjusting
our menu pricing. From time to time, competitive circum-
stances, or judgments about consumer acceptance of
price increases, may limit menu price exibility, and in those
circumstances, increases in commodity prices can result in
lower margins.
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